By: Maureen O’Brien, Segal Marco Advisors
The recent Executive Order on proxy advisors does not change the rules today, although it clearly signals pressure on the proxy advisory ecosystem and on shareholder rights more broadly. The long term implications will depend on regulatory follow through, judicial outcomes, and how investors and companies adapt their engagement practices in response.
On December 11, 2025, the White House issued an Executive Order aimed at reducing the influence of proxy advisory firms. While the order does not mandate immediate regulatory change, it sends a signal about where the administration would like to go.
The Executive Order directs three federal agencies — the SEC, FTC, and Department of Labor — to investigate proxy advisory firms, but it does not compel those agencies to take specific action. There are no immediate enforcement changes.
The order highlights several concerns the administration wants to examine more closely, including:
- The market dominance of proxy advisors ISS and Glass Lewis
- The foreign ownership structures of these firms
- The role of ESG data and analysis in proxy voting recommendations
This Executive Order does not arrive in isolation. The past year has already seen a broader erosion of shareholder rights through recent SEC actions and state-level laws — notably in Texas — that have reduced or removed traditional tools of shareholder participation.
What Does This Mean Going Forward?
The long-term fate of core shareholder tools — including access to the proxy, exempt solicitations, and shareholder proposals used to test broader investor sentiment — may ultimately be decided in the courts. In the near term, however, we have already noticed:
- Fewer shareholder proposals
- Fewer exempt solicitations
- More investor-company engagement behind closed doors
What remains uncertain is how shareholder voice — and corporate responsiveness — will evolve if transparency continues to decline and formal shareholder mechanisms are further constrained.
What Initially Gave Rise to Proxy Voting?
Shareholder voting rights have long been integral to the U.S. capital markets and are widely viewed as a core mechanism supporting market transparency and investor confidence.
Congress established federal proxy voting protections as part of the Securities Exchange Act of 1934 to address a specific structural problem: the growing separation of ownership and control in publicly traded companies.
A Congressional Committee Report Issued During the Act’s Passage Explained:
“The widespread ownership of corporate securities, with its concomitant separation of corporate ownership and management, gave rise to conditions under which security holders frequently were denied an effective voice in or information about the business in which they had invested their capital, and the management was able to perpetuate itself in office and carry on corporate affairs with an eye more to its own advantage than to that of the corporation.”1
The Report Made Congress’s Intent Clear:
“Fair corporate suffrage is an important right that should attach to every equity security bought on a public exchange. Managements of properties owned by the investing public should not be permitted to perpetuate themselves by the misuse of corporate proxies.”2 That underlying market structure has not changed. Ownership of U.S. public companies remains widely dispersed. BlackRock, State Street Global Advisors, and Vanguard are often the largest shareholders of publicly traded firms, yet they typically hold only 3–8% stakes individually. At the same time, U.S. nonfinancial companies receive approximately 67% of their funding from equity financing.3 Broad ownership — largely through retirement accounts and pooled investment vehicles — is the fuel that grows U.S. companies and, by extension, the U.S. economy.
Because shareholder value is directly affected, mergers, reincorporation, and other material transactions require shareholder approval. The same is often true for executive compensation structures and long-term strategic planning, including decisions related to future energy mix and capital allocation. Proxy votes provide companies with a routine, low risk mechanism to understand investor preferences and gauge market support while investors benefit from better understanding company intent.
Reducing shareholder proposals and erecting additional hurdles to proxy voting risks disrupting a governance process that has been foundational to U.S. capital markets for nearly a century.
What’s Next?
Proxy voting was established precisely to protect investors in a market defined by dispersed ownership and professional management. Limiting access to proxy tools risks reviving the very conditions Congress sought to address in 1934: reduced transparency, diminished accountability, and weakened investor confidence. As courts, regulators, and market participants respond, the central question is whether U.S. capital markets will continue to rely on open, visible shareholder engagement — or shift further toward closed-door stewardship with fewer signals and less accountability.
About the author: Maureen O’Brien, Senior Vice President of Corporate Governance, Engagement and Proxy Voting at Segal Marco Advisors, leads corporate engagements on behalf of Segal Marco’s clients and oversees the proxy voting service. Segal Marco is one of the largest U.S. based investment consultancies, with combined advisory assets exceeding $500 billion. Her work in shareholder advocacy began in 2003 as a Research Analyst for the Investor Responsibility Research Center. Prior to Segal Marco, Ms. O’Brien was Head of Engagement at Conflict Risk Network, where she held dialogues with companies operating in Sudan and other conflict zones. Ms. O’Brien is the Chair of Segal Marco’s Sustainability Committee, which evaluates asset managers on sustainability, provides internal education and coordinates topical thought leadership. She is a frequent speaker on these topics at industry events.
Ms. O’Brien received her M.A. from American University in Washington, D.C. and her B.A. from the University of Missouri-Columbia. She holds a Sustainable Investing Certification from the CFA Institute.
Endnotes:
1. Friedman, Daniel M., “SEC Regulation of Corporate Proxies,” Harvard Law Review, March 1950.
2. Ibid.
3. 2024 Capital Markets Fact Book, SIFMA, July 2024, available at 2024 Capital Markets Fact Book.